Dubai launches $408.7 million bond

Investors will be able to will be able to trade in Dubai’s Dh 1.5 billion ($408.7 million) bond issue to be listed on the Dubai Financial Market (DFM) end of May, to help finance the joint ministerial meetings of the World Bank and the International Monetary Fund (IMF) that Dubai will host in September.

Investors will be able to will be able to trade in Dubai’s Dh 1.5 billion ($408.7 million) bond issue to be listed on the Dubai Financial Market (DFM) end of May, to help finance the joint ministerial meetings of the World Bank and the International Monetary Fund (IMF) that Dubai will host in September.

Emirates Bank International, HSBC, National Bank of Dubai, National Bank of Abu Dhabi and Standard Chartered Bank underwrote the Bond issue, which will have a term of five years with interest paid semi-annually and carry a fixed interest rate coupon.

The final pricing will be based on the 5-year USD Swap rate plus a spread of the interest rate will to be established following a price discovery exercise undertaken by the Joint Lead Arrangers. This process is being used for the first time in the UAE for a bond issue and will help ensure that the issue spread reflects the actual market appetite.

The minimum investment amount in the bond will be Dh 1 Million, but, thereafter, investors will be able to trade the bond in multiples of Dh 25,000 via exchange brokers.

“By electing to issue a Setting the Bond as a fixed rate bond, the Government of Dubai is generating a benchmark interest rate making the local debt market more complete and helping generate efficient investment and financing decisions,” said Ibrahim Belselah, head of the Dubai 2003 committee, said in the statement.

“At the same time, the Government of Dubai is providing an attractive, alternative investment opportunity to investors when short term interest rates are at a historic low.” Belselah added.